The n-person Kalai-Smorodinsky bargaining solution under pre-donations

Abstract

This study examines the behavior of simple n-person bargaining problems under pre-donations where the Kalai-Smorodinsky (KS) solution is operant. Predonations are a unilateral commitment to transfer a portion of one's utility to someone else, and are used to distort the bargaining set and thereby influence the bargaining solution. In equilibrium, these pre-donations are Pareto-improving over the undistorted solution; moreover, when the agents' preferences are sufficiently distinct, the equilibrium solution coincides with the concessionary division rule. © 2010 Springer-Verlag.